How best to use my spare cash?
The Personal Finance Forum offers expert advice from ASM Horwath directors Alan Curry (left) and Keith Storey.
My children have left home and we now find that we have some spare income. Can you give me a few ideas what I should do with my spare cash? EL, Jordanstown
Answer: I’d like to say holidays and I could, if pushed, provide some suggestions to help you on your way! But you have probably already accounted for these before you wrote into BTOnline
Realistically, however, this is the time in your life when you can really make your spare cash work for you and prepare for the time when you no longer need to work and can enjoy your retirement in financial security.
Obtain outstanding balances for your car or personal loans, and mortgage, and check the balance of your savings account. Write down a list of income and outgoings and work out how much spare cash you have.
Consider making additional payments to clear your outstanding mortgage and any other debts you have - this makes good financial sense. Some people channel all their spare income to clear their debts. I prefer a more balanced approach, by reducing debts and getting in to the habit of saving regularly.
Look at maximising tax efficient savings, such as ISAs. If you are prepared to accept investment risk (ie values can reduce significantly as well as grow in value) and are saving over a 5 to 10 period, consider investing on a monthly basis in a Stocks & Shares ISA.
Get a forecast of your likely state pension by visiting www.thepensionservice.gov.uk and working out how much income you need to live comfortably when you retire. Consider paying more in to your existing pension plans to supplement the income from your state pension, so increasing the level of retirement benefits you will enjoy when you stop working.
How you manage your money in the last years of your working life will make a big difference the quality of life in retirement. And don’t forget to allow yourself a holiday or two! Enjoy some of your spare cash while you are fit and able to do so.